Russia’s invasion of Ukraine is one of the most controversial issues in Central Asia. The protracted military conflict has led to intense debate about the economic and political future of Central Asia. Experts and society are actively discussing the future of Eurasian integration, the strategic initiatives promoted by China, as well as the prospects for cooperation with Western countries such as the European Union and the United States. In this discussion, a special place is given to Türkiye, as a new promising player in the region, which has broad public support. Thus, the purpose of this commentary is to reveal the evolution of Türkiye’s relations with the Central Asian region, to show the current status of economic and political cooperation, as well as the prospects for regional integration.
Türkiye as a trade partner of Central Asia
International trade is essential in deepening economic cooperation between countries. Trade has a positive impact on economic growth, higher income levels, and helps to reduce poverty. Moreover, trade is a factor for the emergence of integration incentives. Mutual trade between Türkiye and Central Asia shows a significant change (Figure 1).
Figure 1. Trade of Türkiye with Central Asian countries, million $
Source: Author’s compilation based on the International Trade Center (2022) data.
The trade turnover between the parties increased from $838 million in 2002 to $9511 million in 2021. The latter indicator is a record volume of mutual trade. It should be noted that the trade turnover was significantly exposed to external and internal economic shocks, such as economic slowdown due to geopolitical factors, the end of the energy “super cycle”, the pandemic, as well as internal economic crises in Central Asia and Türkiye. All of the above factors contributed to a significant drop in bilateral trade between 2014 and 2020 [International Trade Center, 2022].
The dynamics of bilateral trade show that in the early 2000s, trade was balanced, and, to a greater extent, Türkiye’s imports from Central Asia exceeded its exports. For example, in 2002 Türkiye’s export to Central Asia was $405 million, while its import was $433 million. Starting in 2013, Türkiye’s exports began to exceed its imports. In 2021, Türkiye’s net exports to Central Asia amounted to $735 million. The maximum value of net exports was observed in 2014 when the figure equaled $1683 million.
Figure 2 shows the role of Türkiye in the foreign trade of the Central Asian countries. First, it should be noted that Türkiye is in the top 5 exporters and importers for the countries of the region, and for Turkmenistan, it is a key trading partner. Thus, in 2021, Türkiye’s share in the gross exports and imports of Turkmenistan was approximately 23%. For Tajikistan and Uzbekistan, the role of the Türkiye’s market is growing. Türkiye’s share in the countries’ gross exports was 13% and 11.7%, respectively [International Trade Center, 2022].
Analysis of mutual trade by countries shows a significant increase in the role of Uzbekistan. So, if in 2010 the share of Uzbekistan in Türkiye’s exports to Central Asia was 11%, then in 2021 it increased to 36%. Over the same period, the share of Uzbekistan in Türkiye’s total imports from the Central Asian countries increased from 29% to 41%. The share of Kazakhstan in Türkiye’s trade with the countries of the region has decreased, while Türkiye has significantly increased exports to Kyrgyzstan. Thus, the trade turnover data shows that Türkiye’s role as a key trading partner of the Central Asian countries has increased markedly. It should be emphasized that the deepening of the trade partnership with Türkiye contributes to the diversification of supplies to the region. The fact that Türkiye has become a net exporter to the Central Asian region is one of its key achievements.
Figure 2. Share of Türkiye in trade of the countries of Central Asia, 2021, %
Source: Author’s compilation based on the International Trade Center (2022) data.
Türkiye’s Economic Diplomacy in Central Asia
For Türkiye’s politicians, Central Asia is one of the key regions for strengthening and deepening cooperation. Politicians and diplomats operate both at the bilateral and regional levels, actively using the platforms being created. At the end of March 2022, the President of Türkiye flew on an official visit to Uzbekistan, during which it was announced that the status of bilateral relations had been upgraded to a “comprehensive strategic partnership”. At the end of the negotiations, 10 documents were signed, including the Preferential Trade Agreement, the Framework Agreement on Cooperation in the Military and Defense Sphere, and the Agreement on the Transfer of Convicts. The presidents also held the second meeting of the Uzbekistan-Türkiye High-Level Strategic Cooperation Council. President Erdogan proposed to hold meetings of the council not once every two years, but annually. He also noted that at the end of 2021, the volume of bilateral trade between Türkiye and Uzbekistan exceeded $3.6 billion, an increase of 72%. The countries plan to increase bilateral trade to $5 billion during the year, and in the long term – up to $10 billion. As part of the visit of the President of Türkiye, a ceremony was held to launch a modern thermal power plant in the Tashkent region and start a project to build a similar station in the Syrdarya region. These projects will be implemented by Cengiz Enerji, a Turkish company [Gazeta.uz, 2022].
In May 2022, the President of Kazakhstan, Kassym-Jomart Tokayev, during his visit to Türkiye, noted that the trade turnover between the countries in 2021 exceeded $5 billion and proposed increasing mutual trade to $10 billion. The President stressed that Türkiye is one of the five key trading partners and is one of the 10 largest investors. Türkiye’s investments in the economy of Kazakhstan exceeded $4 billion, while Kazakhstan invested more than $1 billion in Türkiye’s economy. Over the past two years, 16 investment projects have been implemented in Kazakhstan. The President noted the need to strengthen the transport and transit partnership and better use the potential of the Trans-Caspian International Transport Route (Middle Corridor). Following the talks, the presidents signed a Joint Statement on an expanded strategic partnership. In addition, members of official delegations in the presence of the heads of state signed 14 documents, including the Agreement on the organization of information exchange and simplification of customs control procedures [Akorda, 2022].
It should be noted that the Middle Corridor plays an important role in strengthening regional cooperation. This corridor connects the Chinese city of Xi’an with Istanbul through Kazakhstan, Azerbaijan (via the Caspian Sea) and Georgia. This route reduces the delivery time of goods to 12 days, compared to about a month for sea shipments between China and Türkiye [Lillis, 2022]. It should be emphasized that the total capital of Türkiye’s companies in the economy of Kazakhstan is nearly $120 billion, which is almost 20% of Türkiye’s GDP or 70% of Kazakhstan’s GDP. During the visit, commercial agreements worth around $1.1 billion were signed, including the joint production of Anka unmanned aerial vehicles in Kazakhstan, which will be Anka’s first production base outside of Türkiye [The Astana Times, 2022].
In August 2022, Türkiye’s Minister of Commerce Mehmet Mus, speaking at a trilateral meeting between Türkiye, Azerbaijan and Uzbekistan in Tashkent, noted that the three countries have important combined commercial potential with a total gross domestic product of about $1 trillion and a population of about 130 million people. According to him, the preferential trade agreements signed with Azerbaijan and Uzbekistan testify to the importance of realizing this potential. The Minister expressed confidence that the steps to be taken to reduce bureaucratic barriers at customs posts would facilitate trade between the countries and increase trade turnover. According to him, Azerbaijan and Uzbekistan play an important role in Türkiye’s trade with Central Asia, while Türkiye also acts as a bridge in Azerbaijan’s and Uzbekistan’s trade with Europe, the Middle East and Africa [Daily Sabah, 2022].
It is necessary to pay attention to the Preferential Trade Agreement, the main purpose of which was to further strengthen trade and economic ties by creating even more favorable business conditions for manufacturers and exporters of Uzbekistan and Türkiye. As part of the agreement, the parties approved a list of products subject to preferential trade, consisting of 12 items (for each republic). The list of Uzbek goods is dominated by the agricultural sector and Türkiye’s – by industrial products. The reduction of trade barriers opens up opportunities for the producers of the two countries to strengthen their market positions. At the same time, it is planned to consider in the future the issue of expanding the list of goods approved under the agreement, based on the production and export potential of the states [Yangi Oʻzbekiston, 2022]. Moreover, it is worth noting the growth of Türkiye’s investment activity in Uzbekistan. The volume of investments of Türkiye’s entrepreneurs in the economy of Uzbekistan for 2016-2021 amounted to almost $2.3 billion. If in 2016 the volume of investments made by Türkiye amounted to 0.4% of the total volume of foreign investments, then in 2020 this figure reached 9.3%, and in 2021 – 11.1%. The number of enterprises with Türkiye’s capital amounted to 1,912 units [Nurdinova, 2022].
Thus, Türkiye’s economic diplomacy was the result of the conclusion of important agreements, in particular, trade ones, which can strengthen Türkiye’s trade and investment positions in the Central Asian region.
Prospects for comprehensive cooperation between Türkiye and Central Asia.
Cooperation between Türkiye and Central Asia is comprehensive. Türkiye is actively manifesting itself in the military-industrial sphere. Thus, Turkmenistan is one of the leading buyers of Türkiye’s weapons, in particular, Bayraktar TB2 drones. Kyrgyzstan, which has a long-term military conflict with Tajikistan, also bought Bayraktar TB2 drones. In February, after the start of the Russian invasion of Ukraine, Olzhas Khusainov, head of the international cooperation department of the Kazakh Defense Ministry, met with the Türkiye’s military attache in Kazakhstan, Fatih Pala, to discuss cooperation. At the end of March, Uzbek Defense Minister Bakhodir Kurbanov signed a cooperation agreement with his Türkiye counterpart Hulusi Akar [Pannier, 2022].
Türkiye’s President Recep Tayyip Erdogan attended the sixth summit of the Conference on Interaction and Confidence Building Measures in Asia. During his visit to Astana, the President of Türkiye took part in the 4th meeting of the High-Level Strategic Cooperation Council. The parties agreed that in the near future, the volume of bilateral trade will double to $10 billion. The Presidents stressed the key role of the Middle Corridor in export diversification. President of Kazakhstan Kassym-Jomart Tokayev awarded his Türkiye’s counterpart with the Dostyk Order of the first degree. Thus, the “table tennis diplomacy” that began in Ankara continued in Astana [Tomar, 2022]. It should be emphasized here that President Erdogan made an important political statement. In particular, the Türkiye’s leader noted that Ankara will continue to support the stability, peace, independence and territorial integrity of fraternal Kazakhstan [Daily Sabah, 2022].
The leaders of the Organization of Turkic States met again at the Samarkand Summit, which was held in November 2022 under the motto “A New Era of Turkic Civilization: On the Path to Common Development and Prosperity.” The last summit was dedicated to deepening economic cooperation, improving transport corridors, food security and digitalization between the participating countries. In his speech, Head of State Kassym-Jomart Tokayev noted that Kazakhstan attaches particular importance to comprehensive cooperation with the Turkic countries, including the development of a common transport system as the Middle Corridor. At the suggestion of the President of Uzbekistan Shavkat Mirziyoyev, a decision was made to hold the International Turkic Economic Forum annually. President Mirziyoyev noted that the potential and capabilities of the organization are not fully utilized and the mutual trade between the countries is only 4% of the total foreign trade [Kazinform, 2022]. One of the most important achievements of this summit was the decision to establish the Turkic Investment Fund, through which a more economically developed Türkiye can implement joint projects, thereby strengthening its position in the region. The development of the Middle Corridor will also contribute to deepening cooperation and strengthening the role of Türkiye. Thus, it should be noted that the lack of common borders hindered trade cooperation and made Ankara dependent on Iran as a transit country, which is also trying to strengthen cooperation with the Central Asian region. There were cases when Iran tried to reduce the competitiveness of Türkiye’s goods by raising transit tariffs. Thus, the development of the Middle Corridor significantly reduces political risks for Türkiye [Khitakhunov, 2022].
Thus, based on the abovementioned, the following conclusions can be drawn. Firstly, trade and investment cooperation contributed to the strengthening of Türkiye’s position in the region. Secondly, the geopolitical situation creates prerequisites for deepening the economic and political integration of Central Asia and Türkiye. Thirdly, the Central Asian countries need to use cooperation with Türkiye to diversify export corridors and further develop regional infrastructure. It should be emphasized that cooperation with Türkiye can reduce political risks for the countries of the region. Thus, the “New era of Turkic civilization” will depend on the success of the integration policy.
References:
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Note: The views expressed in this blog are the author’s own and do not necessarily reflect the Institute’s editorial policy.